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| 08-20-2010
Normally considered the bane of Florida citrus growers, this January's freeze may have rescued the 2009-10 season.
Essentially, industry officials say, Florida growers hit the jackpot when buyers, relying on historical data, bid up citrus farm prices in anticipation of fruit shortages that never came.
"Definitely, the freeze helped the (early-mid season varieties)," said Tom Spreen, a University of Florida economist specializing in citrus economics. "There was some market psychology at work that boosted prices."
Freezes usually devastate the existing citrus crop and damage trees, reducing future fruit production for a year or more. That's what happened in Florida during the 1980s, when three major and several minor freezes destroyed thousands of grove acres.
The resulting fruit shortages traditionally pushed up farm prices that citrus growers got from juice processors and brokers, who buy 95 percent of Florida's orange crop. But most growers will tell you the higher prices barely, if ever, make up for fruit losses when they close their books at the end of the season.
That history didn't repeat itself after a month of freezing weather that struck Florida in January.
"It was definitely a profitable season. Growers did well," said Larry Black, production manager at Peace River Packing Co. in Fort Meade, which has 1,400 grove acres in Polk County.
Bob Norberg, an economist and deputy executive director at the Florida Department of Citrus, said orange buyers acted on their knowledge of the historical impact of freezes.
"That was true in particular for speculative interests in the (futures) market," Norberg said. "They aren't in Florida. They react only to what they see in the media."
The 2009-10 season began last October with processors' offering very low prices for early and mid-season oranges, picked then through March. Initial offers on the cash market were $1.05 to $1.20 per pound solids, a measure of the amount of juice squeezed from citrus, according to Lakeland-based Florida Citrus Mutual, the state's largest grower representative.
Demand for the new crop was low because processors were sitting on large OJ inventories, Spreen said. The break-even farm price for most growers is around $1.25 per pound solids.
The season-average price for early-mid oranges jumped to $1.24 per pound solids by Jan. 2, Citrus Mutual reported. A month later, processors were offering $1.55 for the remaining early-mids, and the season average stood at $1.30.
In February, processors were offering $1.75 for late-season Valencia oranges, which are harvested from March through June. The sweeter, juicer Valencias normally sell 10 cents to 20 cents higher than early-mids.
The average early-mid price in 2009-10 ended at nearly $1.41, up from $1.18 on average a year ago, according to the Citrus Department. The Valencia average finished 2009-10 at almost $1.63, up from $1.31 the previous season.
"At those prices, I would think everybody at least broke even, and some people made a lot of money," Spreen said.
The final 2009-10 Florida orange crop finished at 133.6 million boxes, down 18 percent from the previous season's orange crop of 162.5 million boxes, according to the U.S. Department of Agriculture.
Read the full, original article from The Ledger.